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UK mortgage approvals at highest levels since 2007 says Bank of England

THE number of mortgage approvals made to home buyers in Britain and Northern Ireland jumped to its highest levels since 2007 in August, the Bank of England said.

Some 84,700 approvals for house purchase were recorded, marking the highest number since October 2007, according to the Bank’s money and credit report.

The Bank said the jump only partially offsets weakness seen between March and June.

In total, there have been 418,000 approvals in 2020, compared with 524,000 in the same period in 2019.

The housing market was effectively closed for business earlier on this year, when social distancing measures due to Covid-19 made the process of home buying and selling very difficult.

The subsequent easing of measures, combined with a stamp duty holiday announced in July, have boosted the market.

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Propertymark reported this week that about one in eight homes sold in August went for more than the original asking price – marking the highest proportion in nearly five years.

Looking to the months ahead, some experts have predicted the prospect of rising unemployment and a dwindling number of low deposit mortgages as lenders shy away from “riskier” lending will dampen the market.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said a recent increase in mortgage rates, particularly for low deposit loans, “will make purchases unaffordable for many first-time buyers”.

He continued: “The outlook for a further drop in employment also will weigh on the housing market, though with home ownership having narrowed to a wealthier segment of the population over the last decade, job losses won’t have as devastating an impact on the market as they did in 2008.”

The report also showed that interest rates on overdrafts jumped in August.

The “effective” rate – the actual interest rate paid – on interest-charging overdrafts rose by 4.2 percentage points to 19 per cent in August.

This is the highest rate since similar records started in 2016 and compares to a rate of 10.32 per cent in March 2020, before new rules on overdraft pricing came into effect.

Under the new Financial Conduct Authority (FCA) rules, overdraft providers have to charge one single rate of interest rather than adding on other charges.

Before the coronavirus pandemic, many providers announced new rates which were around double what many people with an authorised overdraft had previously been on.

The FCA has introduced guidance for firms to help overdraft customers who have been facing temporary financial difficulties due to the coronavirus pandemic. As part of this, borrowers have been offered a temporary £500 interest-free overdraft buffer.

The report also said typical rates on new personal loans increased a little in August, to 4.71 per cent.

The typical cost of credit card borrowing was broadly unchanged at 17.95 per cent in August.

Households’ deposits increased by £5.2 billion in August. That was lower than the increase of £6.5 billion in July and below the average of £17.2 billion between March and June.

The returns savers were getting tumbled further in August. The effective interest rate on new deposits fell to a new low of 0.5 per cent, the Bank said.

Mr Tombs said the Bank’s report seems to reflect households returning to spending most of their income, following a period of “enforced” saving during the full lockdown in the second quarter of 2020.

He added: “High unemployment, however, likely will prompt households to maintain a large savings buffer over the next year, ensuring that spending does not exceed households’ diminished incomes over the coming quarters.”

Alistair McQueen, head of savings and retirement at Aviva, said: “A large proportion of households are likely to shift to precautionary saving in anticipation of further economic turmoil caused by the reintroduction of stricter local lockdown measures. This will dent consumer spending, which will curb the UK’s economic recovery.”

Source: The Irish News

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UK mortgage approvals beat expectations as housing market reopens

UK mortgage approvals beat expectations and rocketed in June as the housing market reopened from the coronavirus lockdown, the latest figures have shown.

The number of mortgages approved by UK banks rose to 40,000 in June after May’s record crash to just 9,300, the Bank of England said today. Analysts had predicted a rise to 34,000.

However, approvals were still 46 per cent below the February level of 73,700.

“The mortgage market showed some signs of recovery in June, but remained relatively weak in comparison to pre-Covid,” the Bank of England said.

An increase in house purchases helped consumer borrowing trends take a step closer to normality in June.

UK households pay down debts as mortgage approvals rise

Households repaid £86m of debt last month. But that was lower than the repayments totalling £15.6bn over the March to May period.

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People have been paying down their debts and saving money as there has been little to spend on during lockdown. The net repayments of the last four months contrast with an average of £1.1bn of borrowing per month in the year and a half to February.

The UK government has gradually loosened the country’s coronavirus restrictions over the last two months. In May it allowed the housing market to reopen, leading to June’s uptick in mortgage approvals.

In June the government allowed “non-essential” shops to reopen. And earlier this month pubs, cafes and restaurants were allowed to serve customers again.

The Treasury has unveiled a number of policies to encourage people to part with their lockdown savings. It hopes a VAT cut for the hospitality and tourism sectors and “eat out to help out” vouchers will boost the economy.

Chancellor Rishi Sunak’s stamp duty holiday has already helped the London housing market after just two weeks, data showed yesterday. London house sales rocketed 27 per cent after the property tax was slashed, housing website Zoopla said yesterday.

By Harry Robertson

Source: City AM

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UK mortgage approvals jump as political uncertainty eases

Mortgage approvals have risen to their highest level since February 2016, data published by the Bank of England on Monday showed.

The central bank said there were 70,888 mortgage approvals for house purchase in January, a 4.4% improvement on December’s figure and the highest for 47 months. It was also comfortably above analyst expectations for around 68,000.

Remortgage rates also grew, by 3.9% to 52,100.

Net mortgage borrowing by households, which lags approvals, was £4.0bn, slightly below the £4.3bn six-month average. The annual growth rate for mortgage borrowing remained at 3.4%.

Howard Archer, chief economic advisor to the EY Item Club, said: “The data very much fuels the view that the housing market is currently benefiting markedly from increased confidence and reduced uncertainties following December’s general election.

“A stream of recent data and surveys suggest that the housing market has shifted up a gear after a lacklustre 2019, with particular softness around the third quarter.

“Certainly there is compelling evidence that the housing market has benefited from increased optimism and reduced uncertainties following December’s decisive general election, as well as a greater near-term clarity on Brexit.

“We had been expecting the housing market to continue to benefit in the near term from reduced uncertainties, but it is possible that concerns and uncertainties over the coronavirus outbreak could have an impact.

“We currently expect house prices to 3% over 2020.”

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: “The effective interest rate on all new mortgages dropped to 1.85%, from 1.88% in December, remaining well below the effective rate on the outstanding stock. As a result, the refinancing tailwind to growth in household’s disposable incomes remains on track to strengthen modestly this year. Lower mortgage rates also have underpinned the recover in house purchase mortgage approvals in January.”

The Bank also reported on Monday that the annual growth rate of consumer credit – defined as credit used by consumers to buy goods and services – remained at 6.1% in January. That represented growth of £1.2bn, above both the average seen over the last six months and the consensus, both of which were £1.0bn. The Bank said the rate was “stabilising after the downward trend seen over past three years”.

By Abigail Townsend

Source: ShareCast

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UK mortgage approvals hit six-month low in September – UK Finance

The number of new mortgages approved by British banks hit a six-month low in September, according to a survey that adds to signs the housing market is slowing again ahead of the October Brexit deadline.

Industry body UK Finance said banks approved 42,310 loans for home purchase in September, compared with 42,527 in August, according to seasonally-adjusted data. However, the number of approvals for remortgaging rose to the highest level since November 2017 at 32,649.

UK Finance said annual growth in consumer credit rose to a 19-month high of 4.5%, driven by personal loans and overdrafts rather than credit card lending.

Reporting by Andy Bruce, editing by David Milliken

Source: UK Reuters

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UK mortgage approvals hit two-year high in July as market stabilises – BoE

British lenders approved the greatest number of mortgages in two years during July, adding to signs the housing market has stabilised from its pre-Brexit slowdown, official data showed on Friday.

The Bank of England said lenders approved 67,306 mortgages, up from 66,506 in June and more than any economist predicted in a Reuters poll that had pointed to 66,167 approvals for July.

Britain’s housing market has sagged since the 2016 Brexit referendum – especially in London and neighbouring areas – but has shown signs of a tentative recovery in recent months.

Earlier on Friday mortgage lender Nationwide said house price growth in annual terms inched up to a three-month high in August, although remained weak by recent standards.

The BoE said net mortgage lending rose by 4.611 billion pounds in July, the biggest increase since March 2016, while consumer lending increased by 0.897 billion pounds compared with a forecast rise of 1.0 billion pounds on the month.

Lending to businesses fell by 4.218 billion pounds last month, the sharpest fall since August 2017. While the series is volatile, the severity of the fall could be another sign of nerves in British companies as the Brexit crisis escalates.

Earlier on Friday Lloyds Bank said business confidence fell in August to its lowest level since late 2011.

Source: UK Reuters

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U.K. Mortgage Approvals Jump to Highest in More Than Two Years

Demand for mortgages jumped last month to the highest since early 2017, according to data published Monday.

Loans for house purchases rose almost 11% from a year earlier to a seasonally adjusted 43,342, lobby group UK Finance said. The report covers seven high street banks representing around 60% of total mortgage lending, data on which are due to be published by the Bank of England on Aug. 30.

Meanwhile, credit card spending was 8.2% higher than it July 2018, while borrowing grew by 3.8% in the year. Spending hit a record 12 billion pounds in the month, while repayments reached a record. UK Finance said this shows that consumers are “managing their finances effectively overall.”

By David Goodman

Source: Bloomberg

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UK mortgage approvals rise but consumer lending slows

Britain’s housing market received a modest lift in June as mortgage approvals increased by more than analysts had expected, Bank of England figures showed today.

Annual lending growth to UK consumers slowed from 5.7 per cent in May to 5.5 per cent in June, however, the slowest rate since April 2014.

The number of people taking out mortgages increased by around 800 in June to 66,400 from 65,650 in May. This was the highest number since January and above economists’ expectations of 65,750.

Brexit uncertainty has weighed on house prices in 2019, particularly in London where official figures showed they dropped 4.4 per cent in May year on year, pleasing first-time buyers but upsetting homeowners.

“June’s mortgage data tie in with the view that housing market activity got some help from the avoidance of a disruptive Brexit at the end of March, but the overall benefit has been relatively limited,” said Howard Archer, chief economic advisor to the EY Item Club.

The closely-watched housing survey by the Royal Institution of Chartered Surveyors (Rics) for June showed a “very modest” rise in buyer demand.

Net lending to UK consumers rose by £1bn in June, higher than analysts’ expectations. Yet this was below June 2018’s £1.4bn figure, and annual consumer credit growth slowed to a 5-year low.

“The overall slowdown in consumer credit growth has clearly been significantly affected by markedly weaker private car sales as this has reduced demand for car finance,” said Archer.

Consumer spending has been a bright spot in the UK economy in 2019 as trade and business investment have suffered from political uncertainty. However, there are signs it is slowing.

A CBI survey showed retail sales fell at the fastest pace in over 10 years in June, due in part to the warm weather and football world cup a year earlier.

By Harry Robertson

Source: City AM

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UK mortgage approvals hit two-year high following Brexit extension

The number of mortgage approvals for house purchases in the UK reached a two-year high in April, a survey showed today, suggesting the country’s housing market may be recovering from a recent slowdown.

UK banks approved 42,989 mortgages in April, the highest figure since February 2017 on a seasonally adjusted basis, and up from 38,554 a year earlier, figures from data firm UK Finance showed.

The value of loans approved for house purchases by high street banks in April rose £1.32bn year on year, compared to a rise of £580m year on year in March.

Britain’s housing market has experienced a Brexit-induced slowdown in recent months as customers put off big purchases due to political uncertainty, despite consumer spending in other areas remaining resilient.

Howard Archer, chief economic advisor to the EY Item Club, said: “April’s marked rise in mortgage approvals suggests that housing market activity may well have got at least some temporary support from the avoidance of a disruptive Brexit at the end of March.”

“It may very well also be that the housing market has benefited from recent improved consumer purchasing power and robust employment growth,” he said.

The number of loans approved by high street banks for remortgaging rose £2.99bn in April compared to a year earlier, as homeowners continued to take advantage of record-low interest rates.

Figures from UK Finance also showed that spending on credit cards rose markedly in April to £11.16bn in seasonally adjusted terms, a rise of 8.8 per cent year on year.

UK Finance said: “This growth in spending reflects consumers’ increased preference for using credit cards as a means of payment, particularly online, because of purchase protection and card benefits.”

“Repayments have remained in line with credit card spending, showing overall that consumers are managing their finances effectively,” the firm said.

Gareth Lewis, commercial director of property lender MT Finance, said it was “encouraging” that “people are using their credit cards sensibly,” meaning “credit card debt isn’t spiralling out of control while interest rates are low”.

Overall consumer lending grew 3.8 per cent in April compared to a year earlier, a slight slowdown from March’s growth rate of 4.1 per cent.

Howard Archer said: “While consumers have clearly been less affected by Brexit concerns than businesses, the overall impression remains that they have nevertheless become more careful in their borrowing amid concerns over the economic outlook.”

The amount Britons saved in ISAs and accounts which require notice to withdraw money fell in April, while instant access saving grew.

By Harry Robertson

Source: City AM

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UK mortgage approvals show first annual rise in 14 months – UK Finance

A decline in the number of mortgages approved by British high-street banks flattened out last month, with the first year-on-year rise since September 2017, figures from industry group UK Finance showed on Friday.

Britain’s housing market has slowed since the country voted to leave the European Union in June 2016, and other surveys this month have shown anxiety among consumers and businesses ahead of the planned departure on March 29.

Friday’s data showed British banks approved 39,403 mortgages for house purchase in November on a seasonally adjusted basis, down from 39,640 in October but up by 0.2 percent from November 2017 — the first annual rise in 14 months.

“The housing market is struggling for momentum in the face of still relatively limited consumer purchasing power, fragile consumer confidence and, possibly, wariness over higher interest rates,” Howard Archer, chief economist at consultants EY ITEM Club, said.

Many economists expect house prices to be flat or marginally higher next year, as weakness in London and surrounding areas weighs on faster price growth in other parts of Britain, though the Bank of England has said falls of as much as a third are possible if Brexit descends into chaos.

Prime Minister Theresa May’s minority government plans to seek parliamentary approval for her Brexit deal in the week starting Jan. 14, after scrapping a vote before Christmas due to opposition from lawmakers of all parties.

Without a deal, Britain faces major economic disruption from the reintroduction of tariffs and customs checks at its borders.

UK Finance said credit card lending picked up slightly last month, though this mostly reflected a shift in preferred payment means rather than higher borrowing, with credit cards offering better consumer protection for purchases such as holiday travel.

Net lending to non-financial businesses fell by the most since May, dropping by 656 million pounds ($829 million).

“Overall lending to businesses has remained subdued in this period of economic uncertainty,” UK Finance’s managing director for commercial finance, Stephen Pegge, said.

The Bank of England will publish November mortgage and consumer credit data from a wider range of lenders on Jan. 4.

Source: UK Reuters